Great Shift! Retail investor funds are unprecedentedly fleeing $BTC, and Wall Street data reveals a crisis of "cutting off the source" at its root.

The most stable demand source in the past crypto market—retail investors—are collectively turning away. Market analysis shows that since the end of last year, retail investors’ funds have been continuously flowing into the stock market, a trend that became especially pronounced after a sharp correction in the crypto market last October.

Data indicates that the price of $BTC has fallen nearly 50% from its all-time high of around $126,000, currently hovering around $66,000. Meanwhile, major stock indices have repeatedly hit new highs. This structural change directly undermines the demand foundation of the crypto market. Unlike the stock market, which is supported by corporate profits, dividends, and institutional allocations, crypto assets have long relied heavily on retail speculation as a core driver.

Fund flows clearly confirm this shift. Over the past three months, spot $BTC ETFs have experienced nearly $3 billion in net outflows, despite occasional small inflows on some days. The market crash in October last year was the direct catalyst for this migration, when over 1.6 million traders were liquidated, with more than $19 billion in positions wiped out—over $7 billion of which vanished within an hour.

Analytical reports further note that after the crash, retail funds showed an “almost complete shift to the stock market,” and this trend continues to this day. This marks a clear break from past investment cycles—previously, stocks and digital assets often moved together as risk-on assets, with retail investors not making such distinct choices between the two markets.

In contrast, stock funds continue to attract inflows, and various themed ETFs are also highly popular. For example, during the same period, gold-themed ETFs attracted over $20 billion. Some investment managers observe that retail speculation is expanding into broader thematic trading. Monthly ETF data shows that when funds flow into gold, silver, quantum computing, and other theme ETFs, $BTC and $ETH ETFs experience outflows, directly indicating that a significant portion of speculative retail capital and momentum has shifted to other sectors.

One of the core attractions of crypto assets for retail investors—far exceeding traditional assets in volatility—is weakening. Data shows that the realized volatility ratio of $BTC relative to the Nasdaq index has been declining, even dropping below 2x in the first half of this year. For traders chasing excess returns, the narrowing volatility gap between crypto and stocks reduces their unique appeal.

Deeper structural changes include the widespread adoption of AI tools, which make retail investors increasingly feel they have an analytical edge in the stock market. Profit analysis and stock screening have become more accessible. However, this “sense of informational advantage” is hard to replicate in the crypto market. Crypto assets lack a universally accepted valuation framework, and the expanding universe of investable assets makes it difficult for individual investors to develop confidence in making “informed decisions.” This cognitive gap is further accelerating retail investors’ exit.

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